Credit Card Balance Transfer Offers Become More Generous

With a modest revival in U.S. credit card accounts andoutstandings underway, competition among issuers appears to be growing in thevehicle of balance transfer offers. A recent CreditCards.com survey ofleading issuers’ offers indicates a greater number of choices available toconsumers:

Additionalcredit card companies are now offering promotional rates for at least 12 monthswith some extending it to even 18 months. The CreditCards.com survey of 100popular credit cards’ offers to new customers found several good reasons tocomparison shop and act soon. Consumers should also be aware that fees varywidely among the issuers and most cards give consumers only 90 days or less totake advantage of the lowest rates.

Comparedto the same survey in 2014, more cards or 38 of them offer a balance transferpromotional rate for at least 12 months compared to 33 cards last year. Thenumber of cards with an offer lasting 15 months or more is also up, from 10last year to 17 now.

With most of the offers giving a 90 day window to qualifyfor promotional rates, issuers are clearly trying to grow balances quickly,while also mitigating their risks. 0% offers on balance transfers arealso relatively common for qualified applicants:

The survey also revealed that outof the 100 widely held cards that CreditCards.com examined, 85 allow balancetransfers. Out of those cards, 44 are advertising limited-time balance transferrate promotions with discounted interest rates. Nearly all of those 44promotional offers include a 0% introductory purchase and balance transfer APRsfor a set period of time, which are typically 12 to 15 months. An additionalnine cards offer a 0% introductory rate on balance transfers but not purchases.

With credit card delinquencies and chargeoffs at or nearhistoric lows, issuers may have room to take on a limited amount of higher riskoutstandings. Underwriting criteria remain conservative, however, withlimited appetite to move into subprime territory.

Overview by Ken Paterson, VP Research Operations for Mercator Advisory Group